Banks

Capital Calls: AI goes back to school

17 Apr 2023

Concise views on global finance: Chegg’s sagging shares perked up on news that the education software developer is working with ChatGPT maker OpenAI to create a safer automated tutor. For companies at risk of obsolescence, working with chatbots is a better bet than beating them.

Fed can find inflation silver lining in bank storm

14 Apr 2023

Financial turmoil has prompted lenders to tighten the purse strings. That helps the Federal Reserve to cool the economy but might starve firms of funds. The central bank can spend up to $3 trln to combat a credit crunch without lifting consumer prices. It may need a lot less.

Big bank investors owe thanks to Team America

14 Apr 2023

Earnings surged at JPMorgan, Wells Fargo and Citi as high interest rates more than offset rising bad-debt charges. And while US lenders shed $600 bln of deposits, the biggest held firm. Jamie Dimon and his fellow CEOs are deft drivers, but it’s central bankers that built the car.

For some US banks, it’s still a wonderful life

13 Apr 2023

Big US lenders like JPMorgan and Wells Fargo are likely to say their deposits shrank in the last quarter. But they’ll still be in good shape. Small banks, too, look resilient, profitable and useful. That leaves those in the middle. For them it’s the worst of all worlds.

UBS can score a quick win with Swiss sale

12 Apr 2023

Chair Colm Kelleher’s acquisition of Credit Suisse is infuriating politicians. They fear the new bank will be too big in Switzerland and lead to job cuts. Selling or listing the domestic business would buy political goodwill and give UBS a tidy return on its $4 bln investment.

Sterling’s safe haven status will prove fleeting

6 Apr 2023

Investors have piled into the pound since the start of troubles at US banks, pushing it 5% higher against the dollar. Yet easing turmoil stateside will lead markets to fret more over UK issues: a probable recession, dire long-term growth, and a likely dovish central bank.

Clever break fee cushions TD’s shaky $13 bln deal

5 Apr 2023

The Canadian bank’s acquisition of First Horizon is snarled up in regulatory red tape and some shareholders are fed up. A quirky investment arrangement could cost the buyer $139 mln if it walks away. The novel terms may not save this transaction but do provide helpful insurance.

Swiss mega-bank has scope to shrink to greatness

5 Apr 2023

Swallowing Credit Suisse propels UBS into the big leagues, with $3.4 trln of wealth assets and more dealmaking fees than Citi. Staying large means taking on volatile units and risky clients. Unlike previous empire-builders, CEO Sergio Ermotti has a remit to slash aggressively.

How FDIC dropped the ball and picked up the tab

4 Apr 2023

The US bank watchdog axed a project last year that would have used data to spot risks like those that felled Silicon Valley Bank, amid skepticism from Chair Marty Gruenberg. Had it survived, the plan might not have spared the FDIC a crisis. But it could help avoid the next one.

Bank bail-ins, and how to prevent climate bailouts

4 Apr 2023

Mark Carney helped design the post-2008 system for resolving bust lenders. In this episode of the Exchange, the ex-Bank of England governor tells George Hay what he makes of last month’s rescue of Credit Suisse, and how to limit future financial sector hits from climate change.

Capital Calls: Illumina’s odd bedfellows

3 Apr 2023

Concise views on global finance: The FTC’s order that Illumina unwind its Grail acquisition puts head commissioner Lina Khan on the same side as Carl Icahn. Khan opposes the deal because Illumina can raise prices, while the activist thinks the deal doesn't make sense.

Goldman gently embraces both sides of hostile M&A

31 Mar 2023

The preferred adviser to reluctant takeover targets is benefiting from its broadened horizons. Working with aggressive suitors Public Storage and Emerson Electric helped keep bankers busy amid a 45% slump in deals. Merger culture has changed, as has Goldman’s broader strategy.

Swiss anger will sour UBS’s deal of the century

31 Mar 2023

Politicians and citizens are unhappy about job cuts and future risks arising from the bank’s $3 bln state-backed Credit Suisse rescue. Parliament fury may force returning CEO Sergio Ermotti to tweak the deal. Either way, an unsavory domestic whiff could hang over UBS for years.

ECB’s inflation battle has a 550 bln euro problem

31 Mar 2023

Christine Lagarde must keep tightening policy without triggering a bank crisis. She faces a test in June when a chunk of emergency loans comes due, increasing lenders’ funding costs. Targeted help, however, could ease financial risks and preserve the fight against high prices.

How post-2008 bank rules led to a 2023 problem

30 Mar 2023

After the last crisis, regulators pushed lenders away from fickle market-based finance to deposits instead. Yet Credit Suisse and Silicon Valley Bank showed that not all customer cash is stable. Applying the same fix again is impossible, which means the problem is here to stay.

Bank rescue real estate turns from dowry to downer

30 Mar 2023

In 2008, failed lenders like Bear Stearns owned prime property that helped underpin value for buyers. But Credit Suisse sold off much of its real estate before UBS swooped. Its long-term leases may prove a headache as remote working shrinks demand for office space.

Boomerang UBS boss ticks several important boxes

29 Mar 2023

Sergio Ermotti is returning as CEO after less than three years. The suboptimal governance move highlights a dearth of senior banking talent. But Ermotti’s record of shrinking an investment bank – and his Swiss passport – will be vital in the tricky integration of Credit Suisse.

Switzerland casts Asian bankers in a rich light

29 Mar 2023

Credit Suisse’s blow-up will speed up a rethink about where crazy rich Asians will park $180 trln of household wealth. Global banks’ risk appetite is shrinking even as HSBC and others ramp up in the region via acquisitions. Rising giants like Singapore’s DBS and UOB will benefit.

Bank health barometer could use own health warning

28 Mar 2023

Stock market investors interpreted last week’s jump in Deutsche Bank’s credit default swaps as a sign of distress. Yet thin trading in parts of the $12 trln market for speculating on creditworthiness can exaggerate moves. Add social media and it can feed self-fulfilling spirals.

SVB sale puts too-big-to-fail risk in a new bottle

27 Mar 2023

First Citizens got a good deal buying Silicon Valley Bank’s assets. For regulators, it’s a tradeoff. The buyer’s balance sheet has nearly quadrupled in just over a year. Until flaws in overseeing fast-growing banks are fixed, promoting aggressive expansion brings new pitfalls.